State battles debt after a year of populist offerings

MUMBAI: Scrapping local body tax and exempting cars from paying toll tax, among other populist measures, is costing the state exchequer dear.

The unexpected burden of Rs10,000 crore toward drought relief has increased the state government’s budget deficit to more than Rs13,000 crore. These factors will not only lead to cuts in development schemes, but also make preparing the state’s budget for 2016-17 a difficult task for finance minister Sudhir Mungantiwar.

To make matters worse for him, the collection of revenue from key sources like sales tax and excise duty is likely to be at least 10% less than expected.

As Mungantiwar presents the state BJP government’s second budget on Friday, he has the unenviable task of trying to strike a balance.

The current year’s budget deficit is expected to shoot up to Rs13,000 crore, from the Rs3,757 crore Mungantiwar estimated in 2015-16 budget.

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